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US IT giant VMware expands private network projects in LatAm

Bnamericas Published: Wednesday, November 02, 2022
US IT giant VMware expands private network projects in LatAm

US virtualization and cloud infrastructure group VMware is widening its project portfolio involving private wireless networks across Latin America, including 5G, according to the company’s Brazil head José Duarte. 

“We have announced partnerships, whether with Ericsson, with NTT, for private networks for 5G. We have other cases of private networks to be announced as well. It's a trend in many segments, whether it's the public sector, the financial sector, or the healthcare sector,” Duarte told BNamericas.

VMware operates in an ecosystem of partners, including integrators, hardware providers and telcos.

In the telco cloud landscape, the group is implementing network virtualization projects for Telefônica Brasil and TIM, and effectively “with all the main carriers.”

Last January, Telefônica announced it had hired VMware and NTT as partners in a broad project for modernization and virtualization of networks and infrastructure. The carrier expects to integrate, deploy and manage virtual network functions and cloud native functions.

Already in progress, the implementation is the result of a two-year project that involved laboratory tests and proofs of concept.

VMware is also part of TIM's project to migrate all its datacenter workloads to Microsoft and Oracle clouds.

In Latin America, Millicom, Telefónica and América Móvil are among VMware’s customers. 

Among the company's most recently disclosed deals are projects with Telecom Argentina, in partnership with Oracle, and with Claro in Colombia.

VMware has around 150 telecom customers worldwide, with Tier 1 communication service providers using its technology to host their network functions and infrastructure to deliver connectivity and services across 4G and 5G networks.

PERSPECTIVES

Duarte is optimistic regarding 2022. “We are closing a great year. We had already had last year the greatest year ever for VMware in Brazil. And as Brazil has a substantial weight for the Latin America operations, that equally led to a record-breaking year for Latin America,” he said. Brazil accounts for 44%-45% of regional sales, he added.

“Our data indicate that we are on track to another very solid year,” added Duarte, without disclosing figures, referring to the closing of the fiscal year in January.

Globally, the company reported revenues for its second quarter of fiscal year 2023, ended July 29, of US$3.33bn, up from US$3.13bn in the year-ago period. 

The bulk of these revenues, US$1.59bn, came from the services segment, which however was down from the US$1.62bn in the quarter ended July 2021. 

The subscription/software-as-a-service (SaaS) segment, on the other hand, delivered highest growth.

VMware does not break down results on a regional basis. 

Operations in Latin America are divided into four regions: Brazil, Mexico, South of Latin America (Argentina, Bolivia, Peru, Chile, Paraguay and Uruguay), and North of Latin America (Colombia, Central America and the Caribbean).

Pandemic year 2020 was complicated, said Duarte, although business digitization regained some momentum in the second half of that year, according to the executive. Among these projects were deployments for the public sector and educational institutes to put up remote operations.

ACQUISITION

The company is also in the process of changing leadership. 

In May, semiconductor group Broadcom announced a deal to acquire VMware for US$61bn, betting on the growing demand for multi- and hybrid-cloud. Broadcom will also assume US$8bn of VMware net debt. The transaction is yet to close.

“By investing and innovating in infrastructure software and VMware’s broad portfolio – including multi-cloud and cloud-native capabilities – we will bring our customers greater flexibility and deliver new solutions to help them connect, scale and protect their IT infrastructure,” Broadcom CEO Hock Tan said in an October statement.

Upon closing of the transaction, Broadcom shareholders will own around 88% of the merged company and current VMware shareholders 12%. 

Michael Dell and Silver Lake, which own 40.2% and 10% of VMware shares, respectively, voted in favor of the transaction. 

In connection with the transaction, Broadcom obtained commitments from a consortium of banks for US$32bn in new, fully committed debt financing.

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